🔄 Policy shift: From sale price to cost
Amazon has announced a significant change to its FBA lost and damaged inventory reimbursement policy. Starting March 10, 2025, reimbursements will no longer be calculated based on the sale price of items. Instead, they will use the manufacturing cost, which excludes expenses like shipping and customs. Amazon will estimate these costs based on similar products or accept seller-provided values. This adjustment, the company says, aims to better align reimbursements with actual production costs.
📉 Impact on seller profitability
Sellers have benefited from the current reimbursement system, which often paid out the median sale price. This included allowances for handling, shipping, and other factors, sometimes making reimbursement more profitable than a sale. The upcoming shift could lower reimbursements significantly, especially for products with high shipping and handling costs. For example, sellers will now bear more risk for lost or damaged items.
🛠 Tools for managing costs
To ease the transition, Amazon will introduce a new feature in January 2025: the "Manage Your Manufacturing Cost" page. This tool will be accessible through the Inventory Defect and Reimbursement portal. Sellers can view, update, and provide their manufacturing costs. Amazon will default to its own estimates if sellers don’t input their data. Accurate reporting by sellers will be crucial to avoid underestimated reimbursements.
⚖️ Exemptions and remaining policies
There’s one exception to the new policy. If an item is lost or damaged after being ordered by a customer, Amazon will still reimburse sellers based on the sales price, minus applicable fees. While this provides some relief, the broader policy change remains a significant shift. Sellers must prepare for potential profit margin impacts by reassessing their pricing strategies and inventory management practices.
How will this policy change affect your business?
